Stay long while setting a stop-loss below the 24,791-pt support. The HSIF formed a white candle last Friday. It closed at 26,113 pts, off its high of 26,187 pts and low of 25,810 pts. Based on the current outlook, we maintain our positive view, as the index has remained above the 24,791-pt support mentioned previously. Technically speaking, as long as the bullishness of the 15 Aug’s “Hammer” pattern is not nullified, this shows that the rebound is still in effect. As such, we believe that the bulls still have control over the market.

Based on the daily chart, we are eyeing the near-term support level at the 26,000-pt psychological spot. This is followed by 24,791 pts, determined from the low of 15 Aug’s “Hammer” pattern. To the upside, the immediate resistance level is anticipated at 26,880 pts, which was 5 Aug’s high. The next resistance would likely be at the 28,000-pt round figure.

Therefore, we advise traders to stay long, in line with our initial recommendation to have long positions above the 26,000-pt level on 21 Aug. At the same time, a stop-loss can be set below the 24,791-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 26 Aug 2019